House Hacking in Bay Area @>$1M!!!!

[Keong Kam]

Hello BP!

I live in bay area and I am looking to see if I can house hack on a quad-plex. 

I am mainly looking in San Jose, Santa Clara area, and I know I know... super expensive, but worth looking right?

I don't think at our price range, house hacking in duplex does not buy me much in terms of reducing housing cost. e.g. ~1.2M purchase, maybe $2500 rent on one side. However, I see that if played right 4-plex might work e.g. ~1.8M purchase, $6-7000 from 3 units and live in one.

I am trying to see what kind of creative financing option I have to make this work. I called a couple of banks and they all say for 4-unit you have to put 25-30% down even for owner occupied case at this price range (>1.5M). I looked up FHA loan and it looks like the limit is ~620K so definitely not going to work. Does anyone have experience doing multi-unit property house hacking with financing strategy to minimize down payment and something like 5/1ARM with IO?

Thanks!!!!!

[Matthew Bailey]

@Keong Kam just curious what you ended up doing.  I've had the same thought.  I ran the numbers about 6 months ago and I'm remembering off the top of my head but I found something like the following: A turn key 2M quadplex in Sunnyvale, with 400k down, would give me 35k/year in equity generated, I'd pay (myself) ~35k/year in rent (all numbers ran with appropriate taxes etc on the BP calculator), and the tax depreciation could be written off against my real estate investing profit from my land flipping business to the amount of an extra 17k/year.  So like everyone has acknowledged, this isn't a "house hack and make $100/month cash flow and live for free" this is an "I'm paying 30k/year in rent already, I'd like to not see that thrown into the abyss but rather into my own equity" play.  So that would be a ~50k swing for me every year to my net worth.

I do a ton of direct mail marketing for my land flipping business and am confident I could get a significant discount on that 2M quadplex if I find one off market, that needs a little work (mostly cosmetic to avoid permits and such), using a very personalized letter.